Wednesday, May 16, 2007

Why Consider Coal as a Backup to Wind?

Does it make sense to consider a coal gasification plant as a possible backup for wind power in Delaware? Two weeks ago, the Public Service Commission (PSC) staff recommended that Delmarva Power be directed to negotiate a long term power deal with Bluewater Wind and with Conectiv energy for a natural gas facility to serve as a backup for wind power. Last week, the PSC adopted the staff recommendation, but added a scaled down version of NRG’s coal gasification plant as a possible backup.After the PSC’s meeting last week, Gov. Minner said she thought a coal gasification plant could still be appropriate for Delaware, leaving me to wonder whether coal was left in the possible mix as a consolation prize for NRG. And yesterday, I opined, “it’s hard to see how a coal gasification plant could operate effectively as part of the mix.”As if on cue, Aaron Nathans of the News Journaldid some digging and found that others, far more knowledgeable than I, share my doubts:

A natural gas plant is suited for that backup role, said Dave Bayless, a professor of mechanical engineering at Ohio University.A natural gas plant is able to fire up quickly, but a coal gasification plant starts up more slowly, he said. That means a coal plant used as a backup would be less responsive during peak demand periods, he said.A coal gasification plant, while cleaner than a traditional coal plant, sends plenty of pollutants into the atmosphere upon startup and shutdown, he said."That would be the worst possible thing to do with IGCC," Bayless said, referring to coal gasification, also called integrated gasification combined cycle technology. "If you want a backup, use natural gas."Robert Howatt, public utilities analyst for the Public Service Commission, agreed that natural gas has a quicker reaction time. Scaling down NRG's proposed 600-megawatt coal gasification plant to a backup unit "represents some real challenges and is unlikely."

So, the question arises, is CCS ready for prime time? The answer is maybe. Of course, overcoming technical hurdles is key to large-scale implementation. The use of CCS also depends whether its costs can be justified economically. In any case, legal and regulatory issues would be of paramount importance to the preservation of credit quality as CCS is put into practice on a large scale.

This would explaing why NRG wasn’t willing to accept the economic risk of carbon sequestration, but want to pass it on to ratepayers, as noted by the PSC’s consultants:

NRG has proposed an exception from provisions that it “absorb any additional environmental compliance costs caused by a change in law,” and its “proposed pricing for [carbon] sequestration is essentially a cost pass-through proposal that is inconsistent with the RFP requirements.”

The negotiations that lie ahead of us are likely to be complex enough without including the unwieldy and inappropriate coal option. I don’t mind allowing NRG its consolation prize, but the smartest, cleanest way to drive the process to a successful conclusion would be to set the coal option aside now instead of continuing to consider untested technology that investors believe won’t work.

3 Comments:

If coal gasification is a boondoggle, why is DNREC's Phil Cherry smitten with it? I thought Phil was a savvy guy. But during the PSC hearings, he pushed hard for NRG to get another bite at the apple. Politics, politics.